Because of the current economic uncertainty, many employers unfortunately are considering making some or all of their employees redundant. Of course there are many reasons why a redundancy situation might occur such as a lack of work, the closing down of particular operations within the company or a reorganisation of the business. Employers should be aware that making someone redundant is not merely a matter of giving that person notice of termination of their employment and a cheque.

What is redundancy?

Redundancy is where an employee's job ceases to exist and he/she is not replaced. In order to qualify for statutory redundancy, an employee must be aged over 16 years and must have been an employee for two years, i.e. he/she must have two years reckonable service. Reckonable service is service excluding ordinary sick leave over and above 26 weeks, occupational injury over and above 52 weeks. All breaks in service should be within the last three years prior to the Date of Termination. Reckonable service also excludes absence from work because of lay-offs or strikes. However, short-time work is reckonable.

The legislation covering this area is the Redundancy Payments Acts 1967-2003. A qualifying employee is entitled to two weeks pay (up to €600 per week) for every year of employment over the age of 16 together with one week's additional pay.

Be prepared!

Don't just assume you can go through your list of employees and select the ones who you find the most troublesome. An employer must show that he/she has examined the workforce of the business as a whole and has applied reasonable selection criteria in a fair manner. You must show that a genuine redundancy situation exists within the company. You should also keep a detailed written account of your private assessment of all of your employees. When discussing redundancy, you must explore the possibility of all alternative options with the employee such as retraining, alternative duties within the business and any other options suggested by the employee.

Notice

You must ensure that you give at least two weeks notice of redundancy to the employee and that you furnish the employee with a redundancy certificate RP50. The employee is also entitled to reasonable time off during the notice period to seek alternative employment. You are also entitled to ask of proof that the employee has actually been seeking alternative employment. You are also entitled to seek a rebate of 60 per cent of the redundancy payment from the Social Insurance Fund.

Consequences of not being prepared

If you do not prepare properly before making an employee redundant, the employee can make a complaint to the Employment Appeals Tribunal that he or she was unfairly selected for redundancy, that fair and reasonable procedures were not used in selecting him/her. If the employee's complaint is upheld, then you could be ordered to pay compensation to the employee for unfair dismissal.

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